Key Moments:
- U.S. government revenue jumped 66% in the fourth quarter to $570 million, lifting total sales to $1.41 billion.
- Meanwhile, Palantir forecast 2026 revenue of $7.18 billion to $7.20 billion, more than 60% above 2025 expectations.
- However, despite a 5% after-hours gain, the stock remains down over 15% this year amid valuation concerns.
Government Surveillance Role Under Spotlight
By Arsheeya Bajwa
Feb 2 (Reuters) – Palantir Technologies CEO Alex Karp defended the company’s surveillance tools on Monday as it reported strong revenue growth. He said the systems include safeguards to limit government overreach. However, he did not address U.S. immigration enforcement actions in Minnesota that have triggered protests.
During the quarter, U.S. government revenue rose 66% from a year earlier to $570 million. As a result, total revenue reached $1.41 billion, beating analyst estimates. In addition, Palantir signaled a sharp rise in sales for 2026, driven partly by government contracts.
Following the results, shares rose 5% in after-hours trading.
ICE Partnerships Draw Intensifying Scrutiny
At the same time, companies working with U.S. Immigration and Customs Enforcement (ICE) face growing pressure. Public opposition has increased after two U.S. citizens were killed in separate January incidents. Against this backdrop, Palantir secured an ICE contract last year to build surveillance tools for immigration enforcement.
Meanwhile, France’s CapGemini said over the weekend it would sell a small U.S. unit holding an ICE contract. The decision followed criticism from French lawmakers and other stakeholders.
On a post-earnings call, Karp said Palantir supports complex U.S. government operations. However, he did not name specific programs or agencies.
AI Expansion and Market Performance
Based in Denver, Palantir continues to promote its artificial intelligence products to commercial clients. Its AI platform helps companies deploy and manage advanced systems. As a result, Palantir has become one of the strongest-performing AI stocks. Shares have risen 1,700% over the past three years.
In a letter to shareholders, Karp said effective privacy protection depends on technical controls. He argued that strong permission systems help limit improper government access.
He added that Palantir’s tools restrict what government users can see. In addition, audit logs track activity to deter both internal and external abuse.
Still, despite long-term gains, the stock is down more than 15% this year. Investors continue to question its valuation. Palantir trades at a 12-month forward price-to-earnings ratio of 140.5.
“Valuation concerns won’t fade,” said eToro analyst Zavier Wong. “Palantir remains priced for perfection, so execution must stay strong.”
Revenue Outlook and Government Ties
Founded by tech billionaire Peter Thiel, Palantir built early momentum through government work, including support from the CIA. Since then, the company has expanded its public-sector footprint. It now expects 2026 revenue between $7.18 billion and $7.20 billion, a gain of more than 60% from 2025.
Thiel also remains influential in U.S. politics. He backed President Donald Trump early and supported Vice President JD Vance during a 2022 Senate campaign.
In April, Palantir won a $30 million ICE contract to help track undocumented immigrants and monitor self-deportations. As of June 3, it was Palantir’s largest ICE award among 46 federal contracts since 2011.
Karp said protecting civil liberties requires built-in oversight. He added that technology should limit access, not expand it.
Forecasts for 2025 and 2026
Looking ahead, Palantir forecast first-quarter revenue between $1.53 billion and $1.54 billion. That compares with a $1.32 billion estimate from LSEG.
Additionally, the company expects U.S. commercial revenue to grow at least 115% in 2026 to more than $3.14 billion. This would mark an acceleration from projected 109% growth in 2025.
Key Financial Figures
| Metric | Value | Context |
|---|---|---|
| Q4 U.S. government revenue | $570 million | Up 66% year-over-year |
| Total Q4 revenue | $1.41 billion | Above analyst expectations |
| First-quarter revenue forecast | $1.53 billion – $1.54 billion | Vs. $1.32 billion estimate (LSEG) |
| 2026 revenue forecast | $7.18 billion – $7.20 billion | More than 60% above 2025 |
| 2026 U.S. commercial revenue outlook | More than $3.14 billion | At least 115% growth |
| ICE contract (April) | $30 million | Largest ICE award since 2011 |
| Share price move (post-earnings) | Up 5% | After-hours trading |
| Year-to-date performance | Down over 15% | Valuation concerns |
| Forward P/E ratio | 140.5 | Investor focus |
| Three-year share gain | 1,700% | AI stock performance |
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